Setting up a business at home

What you need to know

If you're setting up a home business, there are a million and one things you need to know - everything from choosing the best business venture, to choosing the best home business insurance package.

But before we get to all of that, take a moment to enjoy it! This could just be the most fulfilling thing you'll ever do. Setting up a business from home is a thrilling ride. Hard work obviously, but the rewards - both personal and financial - can make it all worthwhile.

This guide covers all the bases.

• We start with business ideas that are best avoided - it's only ever the scammers who get rich from these schemes
• Perhaps you've already found your ideal business opportunity, so skip ahead and find out how to turn the fantasy of working from home into profitable reality
• Get to grips with the red tape and steer clear of all the pitfalls - this is real need-to-know stuff!
• We'll even tell you all you need to know about homeworking in a recession

So read on and get your homeworking career off to the very best start...

Scam alert

There isn't what you'd call a typical homeworker. You're an eclectic bunch. Some of you know exactly what you want to do. You've got a specialism or the know-how to provide a niche service. Some of you don't. You've got the same drive to go-it-alone, but you're still looking for the right business opportunity. And while there are an awful lot of opportunities out there, there are an awful lot of scams too.

So how do you assess the viability of any work from home opportunity? Simply by keeping your best down-to-earth, totally-in-tune-with-reality head on.

If it sounds too good to be true then it probably is. Anytime you get tempted (and you probably will) by a get rich quick scheme promising you thousands of pounds for a few hours’ work every day, repeat this mantra: get rich quick schemes don't work.

Our top three scam alerts:

• Unless you're investing in a bona fide franchise, be wary of any homework provider who wants you to pay a registration fee, or cough up for 'materials'
• Don't believe those unrealistic pay rates - while you can probably find plenty of local companies who need at-home admin or telephone support, they won't want or be able to pay you much more than minimum wage for the privilege
• Money making schemes that aren't what they seem - watch out for the envelope-stuffing jobs that don't deliver, and the self-assemble craft items and greeting cards that don't have a hope of getting past 'quality control', and then there are the get rich quick ebooks that only let you in on how to re-sell the book to other unsuspecting punters

Working from home - the fantasy versus the reality

Ask anyone who's ever wanted to earn their living working from home and they'll paint an idyllic picture of how work ought to be. Boosted by power naps and TV lunches, the work flows like water.

Ask anyone who's ever spent any meaningful time working from home and they'll tell you what it's really like: distractions at every turn. Domestic life colliding with professional life - not quite so idyllic after all.

But actually, with just a little bit of discipline (and if you're embarking on a homeworking career, we're betting you've got it in spades) you can find and stick to a routine that works for you.

And there are plenty of good reasons why working from home really is the better option for any start-up business.

It's cheaper

No question. Granted, you will need to take out some home business insurance - but it's a drop in the ocean compared to what you could be paying for an office.

Fortunately, insurance for home business packages can be very easily tailored to the requirements of your new business. And it needs to be. A good business home insurance provider will take account of where you live and what you do to give a level of cover that suits you. And they'll go further. If you're going to be seeing clients on your premises, your home business insurance needs to take account of it so that you're covered for public liability too.

Contact specialist insurance for home business providers and see what they've got to offer. And you can find out if you really need home business insurance a little further on.

It's convenient

Of course it is. You cut out the daily commute. And you can work hours to suit, whether that's to fit around your childcare commitments or to match the times of day when you're at your most efficient.

Really, the hardest thing for many homeworkers is knowing when to call it a night. So do try and stick to regular hours as much as possible. (If you think getting started in the morning is hard, wait till it comes to finishing). Homeworkers can find the temptation to keep on working (or just nip back to finish something off) is too great. Inevitably there'll be times when it's necessary. And, no successful business succeeded on their founders doing the bare minimum.

So just try to keep it all in perspective. Homeworkers come to rely on the patience and goodwill of their families - and for their sakes, they need to set some pretty strict boundaries and make a clear distinction between their at-home persona and their working-at-home persona.

Equally there's a lot to be said for keeping a physical distance between your home office and the rest of the house. Some homeworkers favour purpose-built outhouses - but if you're working from your spare room, just make sure you shut the door behind you at the end of the day and keep it off limits till the next morning!

It's one less thing to worry about

Bottom line - working from home takes a load off. You've probably already got a phone line and internet access. You've got space to set up your office. And you've got all the comforts of home on hand to help you relax at break times. Low cost, low risk; suddenly starting out in business is open to everyone.

Our pragmatic pointers

Inevitably there are some boring practical considerations that have to be dealt with before we get too carried away. But they're all easily addressed, so we'll keep this quick.

Before you do anything else, make sure you get the okay from your mortgage lender. They may have a stipulation that prevents you from running a business from home. If so, you can still re-work your mortgage arrangement to facilitate your new working from home status. Or you can just find a lender who's willing to offer you the terms you need. You might even be able to save a bit of money by switching your mortgage - but that's a whole other story.

Once that's sorted, there are a host of other contacts you'll need to get in touch with. Use this handy tick-list to make sure you stay on the right side of your responsibilities:

• HMRC - to ascertain your National Insurance and tax requirements
• An accountant - to help you stick to your tax requirements
• Your Local Authority Health & Safety Executive - to ensure your home is a safe working environment
• The Valuation Office Agency - to check your eligibility for business rates
• Car insurance provider - are you covered for business use? Time to find out

Ticking off each of these contacts will take you one step closer to operating a legitimate home business. And taking care of these things now will save you lots of hassle further down the line.

There's just one more thing you need to do, and that's finding the right home and business insurance provider...

Do you really need business from home insurance?

Because working from home helps you cut costs left, right and centre, you might be tempted to cut out all non-essential spending. So do you really need business from home insurance or not?

Business home insurance doesn't differ too much from standard home insurance. You're still covering against damage to buildings, and damage to, or loss of contents. But standard home insurance packages won't give you an appropriate level of cover for your home business.

As a rule, running a business from home won't have too big an impact on your buildings insurance. But there are exceptions. For example, if you're going to be operating a blow torch in your garage, you're certainly going to need an enhanced level of buildings insurance.

Your contents insurance requirements are almost certain to change. Any equipment you buy for the purposes of running your business will need to be insured. And scrimping on contents insurance really isn't an option. For peace of mind, you need to know that any losses or damage sustained to equipment will be compensated, leaving you free to make any necessary replacements. And that means taking out business home insurance is probably going to be well worth your while.

Lay out your requirements to your prospective business home insurance provider and make sure they provide cover to fit. It's wise to test a selection of insurance for home business specialist insurers. You might also want to check their familiarity with the specific requirements of your business sector to get a really good fit.

Homeworking in a recession

You're almost ready to go. We've covered the key things that any homeworker needs to know. And there's just one question remaining: is this such a good time to be going it alone? Is working from home in the midst of a recession really a viable option?

Absolutely.

Really it should come as no surprise that working from home is so fashionable right now. As businesses struggle to stay competitive they're being forced into making some pretty unpleasant compromises. Wage cuts, job losses and enforced redundancies have all changed the look of the nine-to-five world. Faced with a diminishing return for their investment of time and effort, many employees are looking to take matters into their own hands.

Whether as a main occupation, or a lucrative sideline, home businesses are giving people the freedom to take real control of their prospects. In fact, it's reckoned there are nearly 1,500 businesses being started from home in the UK every week!

And plenty of them are cashing in on the deteriorating economic climate. You can too. A major effect of the recession has been the increase in outsourcing opportunities, as employers look to cut costs in permanent staff by outsourcing some or all of their duties to remote workers. Look for opportunities to provide your skills to employers and you'll enjoy the best of both worlds - regular work with all the flexibility of working from home.

And it's not just the skills specialists who are making working from home such a viable prospect. As the economy stutters, more and more services are being outsourced. Even taking telephone orders and manning email helpdesks can be outsourced to home workers as a way of cutting down on overheads.

Working from home isn't just popular because it's long been the dream of so many; it's popular because it's a way of working that's such a good fit for our times.

The key to success

It's really very simple - the ones who succeed with their homeworking business won't be the ones with the best entrepreneurial ideas, they'll be the ones who stick at it and work hard. That's the real secret.

Homeworking isn't the easy option some people think. But it is empowering and potentially very rewarding. Armed with nothing more than a sound business idea and your own home, you can make a very nice living. That's provided you put in the hours, take the right precautions and take it seriously.

Now it's over to you.